Next Deadline for Application is March 24, 2022
The 5th round for Business Restructuring Grant Program started on Feb 17, 2022. The deadline for application is March 24, 2022. I will explain the outline of Business Restructuring Grant Program for corporations.
What is Business Restructuring Grant Program?
Business Restructuring Grant is awarded to corporations with 10% or more sales decrease or with 15% or more added value decrease compared to pre-COVID 19, to subsidize expenses (such as store renovation costs, machinery and equipment and advertising cost) for starting new services or changing businesses to survive along with the new normal and post-COVID 19.
How Much Would I Receive?
The grant rates (percentage of expense amount that will be covered) are 1/2, 2/3 or 3/4 and the award ceiling is JPY 5 million to 100 million depending on the capital stock, number of employees and the types of the grant.
Who is Eligible for Business Restructuring Grant Program?
Small and Medium Enterprises (SME) incorporated in Japan are eligible for Business Restructuring Grant Program.
Criteria for determining whether or not a corporation falls under the category of SME varies depending on the industry. For a manufacturer, the threshold is the capital stock of JPY 300 million or the number of employees of 300. For a service provider, the threshold is the capital stock of JPY 50 million or the number of employees of 100.
Please note that a corporation owned by a large corporation or had taxable income of JPY1.5 billion or more in average in recent three years is not eligible for Business Restructuring Grant Program.
Please also note that, even though a company exceeds the threshold of SME, such a company is still eligible for Business Restructuring Grant Program if its capital stock is less than JPY 1 billion. The grant rate, however, would be smaller than those for SMEs.
What's the Timeline of Business Restructuring Grant Program? What's the Passing Rate?
Your application for the grant and business plan of your project will be reviewed by the grant operation office, and the awarded projects are announced approximately two months after the deadline of application. After that you have to complete the project within approximately one year and submit the implementation report to the grant operation office. At that time evidence documents such as quotes, invoices and receipts relevant to the project are required to be submitted together. The grant operation office will check those evidence and will grant money only for those expenses that are approved to be necessary for the project. Therefore, even if the project that you applied has passed the review, it does not mean that you will receive the full amount written on the application. Furthermore, you have to submit the project status report every year for 5 years.
As written above, you will receive the grant money only after the project has been completed. Therefore, you have to pay the expenses with your own money or loan. You can, however, get funded by a bank immediately after you have passed the review, which is called PO Finance. We can also advise on financing.
The passing rate of Business Restructuring Grant for the 3rd round was approximately 50%.
Cooperation with a Qualified Support Agency for Business Innovation is Required
You can apply by yourself for most of government grants such as Small Business Sales Expansion Grant Program (Shokibo Jigyosha Jizokuka Hojokin). When you apply for Business Restructuring Grant Program, however, you are required to develop your business plan for the project with and obtain a confirmation letter from a qualified support agency for business innovation (Nintei Keiei Kakushintou Shien Kikan). Eri Mizukami, CPA, President of Herald Advisory LLC, has such a qualification and can cooperate with you to develop a business plan and issue a confirmation letter.
In What Cases Can I Use Business Restructuring Grant?
For example:
- A corporation operating a restaurant starts making their menu frozen and selling it online.
- A corporation doing visual and audio business starts live streaming services.
- A corporation manufacturing airplane parts starts manufacturing medical equipment parts.
We assist to apply for Business Restructuring Grant Program. Please feel free to contact us. (We provide this service in English only to corporate clients.)
Author: Eri Mizukami, CPA
